"The board of directors lost confidence that McMillan was capable of supervising the financial condition and the staff. He was put on administrative leave because he had a 60-day notice in his contract," Board Chairman Dugie Freeman said after the board's Tuesday meeting.

Troy, who was introduced at the meeting, will receive "full CEO privileges," Freeman said.

Troy will serve until a new permanent CEO is hired, but Freeman did not know how long that will take. Previously, Troy served as a consultant and then the district's interim CEO prior to McMillan.

Troy said he was hired by the district as a consultant to plan an imaging facility in Brookings in 2005. After studying the project, he said he advised against building it.

A year later the directors hired Troy as interim CEO for six months before McMillan was hired.

"When Dugie called, I felt like it was homecoming," Troy said Tuesday.

The board has yet to determine Troy's salary.

McMillan, who was paid a salary of $149,000 a year, said he had provisions in his contract that require a 60-day notice and six months' severance pay if his contract was not renewed.

The board started to work on a contract for Troy on Tuesday but realized it was not on their agenda for the meeting and it needed to be there for them to act.

Troy offered to draft a proposed contract and present it to board members later for their input. He said he expected to serve on the interim basis for only a short time before a permanent CEO is hired.

Troy received a bachelor's degree from Seattle University and a master's from St. Louis University in hospital administration.

He spent four years as a regular Army officer before becoming an administrator at several hospitals, finally retiring in 2004 from Grays Harbor Community Hospital in Aberdeen, Wash.

The board two weeks ago told McMillan they were considering hiring their consultant, Quorum Health Resources, to manage the district and not renew his contract, which had expired months before but continued in effect.

But board members said they had taken no vote.

The next day, McMillan announced the board had chosen to have Quorum Health Resources manage the hospital.

"As the result of that, I'm stepping down from my position," McMillan said. "I wish the board, hospital and staff good luck."

The health district was told by its auditors last October that it had lost a substantial amount of money during the past two fiscal years, which could endanger the district's ability to stay in business.

The audit showed that the hospital district reported an operating loss of $1,132,000 in the last fiscal year, although CFO Mark Sayler noted that with the property tax collected by the district, that is reduced to $936,000. The loss in Fiscal Year 2010 was $552,000.

The district, which operates Curry General Hospital in Gold Beach, Curry Medical Center in Brookings and Curry Family Medical in Port Orford, had operating income of $466,000 in fiscal year 2009.